FEE: Yes, in My Backyard: The Key to Affordable Housing Is More Housing

FEE: Yes, in My Backyard: The Key to Affordable Housing Is More Housing

Across the United States, we hear we’re facing an affordable housing crisis. Little children, like three-year-old Ethan Wood, are living in tent cities with their parents, some of whom are seeking a fresh start after extensive battles with drug abuse. Then there are others, such as Emilee Broll, who has a full-time job with the federal government yet is still unable to afford rent in a city like Seattle. Nearly half a million Americans are homeless, but even those who do have shelter continue to struggle in their quest to find affordable, long-term housing.

As we brace for another general election, we are beginning to hear candidates weigh in on affordable housing. Federal policy affects access and affordability to housing, but the best approach to this problem is local.

Urbanists will likely debate the best solutions to this crisis for a very long time, but there are several policy changes we can make right now that will help individuals and families achieve the stability and solace of having a place to call home.
Zoning Is Ground Zero

Any policy conversation on this topic will likely begin with a discussion about upzoning neighborhoods. Upzoning is the practice of changing zoning laws to allow for denser and/or taller housing units. However, upzoning alone is insufficient. Parking minimum requirements are another contributor to the affordable housing puzzle that deserves more attention. As Eric Jaffe from City Lab notes, when minimum parking restrictions are lifted, “Instead of building 20 parking spaces, you can put up an entire new building with 20 apartments.” With the removal of onerous parking minimums, the conditions become more favorable for the development of affordable housing.

Numerous factors go into the cost of housing, but fundamentally, pricing is determined by supply and demand. And since land is no longer being made, there’s a limited supply of real estate. However, legal and regulatory restrictions—like land-use and residential zoning regulations and minimum parking restrictions—artificially limit the supply of homes by restricting where housing can be built and the heights homes, condos, and apartments are allowed to reach.

Even modest changes, such as “allowing just 1 in 10 single-family homes in a given neighborhood to host a livable in-law suite above the garage or a bachelor apartment in the basement…[can still] contribute meaningfully to new housing supply as metros grow increasingly unaffordable,” according to Issi Romem, Senior Director of Housing & Urban Economics at Zillow.
Other Factors to Consider

As some critics have pointed out, there are circumstances when building more housing in dense populations does not reduce the cost curve. Other variables, including location, contribute to this economic paradox. For example, urban centers like New York City or San Francisco may be in such high demand that the sum total of all new housing still has not bent the cost curve by exceeding demand. And it’s no secret that the level of demand varies greatly between cities.

Places like New York City, Seattle, and Los Angeles have many attractive, unique features. They’re famous for their nightlife, culture, or natural attractions like proximity to beaches, mountains, and majestic forests. They often also attract large businesses, which typically bring high-paying jobs and investors with them.

Simply put, there is a natural demand for the limited resources for land and housing in places like Manhattan and San Francisco. If we tried to build enough housing for all the people who want to live in these places, we would change their appealing nature to such a degree that they would no longer hold the same luster they currently do.
The Attraction of NIMBYism

And this gets to the heart of the NIMBY (“not-in-my-backyard”) argument. NIMBYists generally oppose further real estate development for a variety of reasons, including preserving local culture and history, as well as real estate values in neighborhoods, whether that be to protect high property values in wealthy areas or prevent gentrification in economically depressed ones. The desire to protect one’s real estate investment is certainly understandable, and the concern for safeguarding the history and culture of unique neighborhoods is undoubtedly well-intentioned. However, at its core, it’s a form of economic protectionism.

There’s no doubt that private property owners have the right to protect their property. However, using unfair—and unjust—zoning restrictions to prevent others from accessing what would otherwise be available property is a form of disenfranchisement. Existing property owners are certainly able to coalition together and purchase the land in order to ensure it remains undisturbed, but to demand municipal officials curtail development simply to prevent others from accessing affordable housing is property protectionism.

And as is common with protectionism, land use laws and regulations benefit the few who are politically connected at the expense of the many. By politically and legally favoring real estate value appreciation or preserving dubious historic real estate, we stand to risk locking individuals and families out of affordable housing.
The YIMBY Alternative

Sunbelt states like Texas and North Carolina are experiencing an influx of immigrants from other states. These individuals might be “refugees” from higher tax and regulation states or are following jobs due to their employer moving to a state with a more attractive business climate.

As opposed to the protectionist mindset held by many NIMBYists, YIMBYism (“Yes-in-my-backyard”) generally favors new construction, new development, upzoning, and the removal of other restrictions on housing and commercial development. YIMBYists assume the basics of supply and demand will play out over time. The more home occupancy options available, the greater the likelihood that a number of the homes on the market will be affordable.

With this mindset, it becomes even more important to consider upzoning and building multi-family units and skyscrapers in and near central business districts. Additional housing units can be brought to the market by removing restrictions on non-family members living together, subdividing existing homes, and allowing the construction and use of accessory dwelling units (ADUs).

One common critique of YIMBYism is that in certain places, like Manhattan, it is rare to see new construction that is built for working families. Essentially, most new construction isn’t truly affordable for the working class or even some of the middle class. This shouldn’t be too surprising, though. The cost of construction in Manhattan compared to other cities is vastly higher and takes much longer. In addition, new construction that is geared toward working and middle-class families would likely become subject to Manhattan’s rent control. To avoid this result, developers build luxury apartments that are not currently subject to rent control or rent stabilization.

In this sense, the experiences of cities like Manhattan and San Francisco are poor examples for the rest of the country that don’t face the same obstinate demand.

Cities in Texas, North Carolina, and throughout the Midwest can get ahead of the cost curve by welcoming new construction and opposing overreach from city councils that might not be aware of the best policies to foster an environment favorable to affordable housing.

The key to affordable housing is both economic freedom and respect for property rights. By liberalizing existing restrictions on construction, development, and use, more housing will become available. As the supply of housing expands, home prices will first stabilize and then come down. However, regard for private property rights is equally important. While it is vital to protect our own property, we should not presume to tell our neighbors how they can peaceably use theirs. By freeing the market to meet the demands of families and individuals, we can make housing affordable and accessible for more of our neighbors, allowing children like Ethan Wood to leave the uncertain, cold life of tent living behind.

Doug McCullough – Director of Lone Star Policy Institute
Brooke Medina – Communications Director Civitas Institute

Originally published at Foundation for Economic Education

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